LGA announces bond agency team

The Local Government Association has appointed key executives to prepare the ground for its proposed municipal bonds agency which is due to issue its first bond next year.
Aidan Brady, lead adviser to the LGA on the project, and the brains behind the agency’s business plan, has been appointed as interim managing director of the company.
His appointment and that of his team has been possible after the LGA decided that it had raised enough money in equity investment from councils to proceed.
A statement from the LGA said that it has raised more than £4.5m from 38 councils wishing to invest in the agency.
It is understood that more than half of the £4.5m committed so far is for the mobilisation phase, with the rest to be released for after the first bond is launched – currently pencilled in for April 2015.
Brady told Room151: “We spoke with about 100 councils and have had 38 commitments from that. There are more than 200 left to approach and we would hope some of those we’ve already spoken to would still be interested. Over time I am pretty confident that a majority would want to join. It is understandable that people need time to be taken on the journey and understand. We are pleased that we have nearly 40 signed out of 100 approached.”
He said he was looking for the 38 to sign up and make their commitment official by the end of September.
The business plan for the agency estimated that it would require between £8m and £10m of operational capital.
The LGA said that local authorities would be able to invest in the agency throughout the rest of this year.
Brady said: “We are still giving ourselves the £8m-£10m as a target that we want to reach by the end of December. However, that figure has conservative buffers, and part of my job at the moment is to get costs down and to ask the question – do we really need to spend that much? We are refining those figures.”
Other members of the executive team announced this week are:

– Markus Krebsz, interim chief risk officer, a member of the UN Economic Commission for Europe Group of Risk Management Experts, advisor to the World Bank, regulatory authorities, central banks and previously the European Commission.

– Tim Cavanagh, interim chief operating officer, a financial service professional who most recently set up a firm to capitalise on opportunities arising out of the market dislocation of 2008, including credit trading, restructuring advisory and project/programme management.

– Christian Wall, a local government finance policy officer with a background in capital markets, has been seconded to the company from the Royal Borough of Kensington and Chelsea.

An inaugural meeting of future shareholders in the agency – which will trade under the name Local Capital Finance Company (LCFC) Limited – is to be held next week.
A business case for the bonds agency, published by the LGA earlier this year, estimated that the agency could save more than £1bn in borrowing costs for councils investing in new infrastructure.
Michael Lockwood, executive director of the LGA, and director of the agency, said: “All types of councils from all over England have thrown their support behind the bonds agency.
“There is a genuine sense of excitement about the progress made so far and the momentum is building up as we prepare for the agency’s official launch.”
“We’re now in the crucial final phase where we start the process of turning these ambitious plans into a reality.”

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